REALTOR.com is on the Move A Three-Dimensional Perspective on Real Estate, the Internet and More
Menlo, California-based venture capital firm, Elevation Partners, has made a $100 million investment in Move, Inc. With a strong commitment to ensuring a healthy future for Realtors, Elevation is working in tandem with Move, Realtor.com and NAR to help transition real estate successfully into the information age. In this exclusive trilogy, learn what Allan Dalton, Mike Long and Roger McNamee believe the real estate industry is up against, and how they plan to lead the battle for Realtors.
Including the Special Feature:
Real Estate Industry Warming
By Allan Dalton
I once read that a problem well stated is 90% solved. Therefore, the way in which problems or threats are defined, characterized, and even branded is vitally important. Is there a better example of how a threat is being well defined or branded than in the utilization of the words “Global Warming?” I submit that these two words in unison are working wonders for a viral-like promulgation of this planet-challenging premise. Even though the numerous individual threats to our planet on their own merit are profoundly troubling, it is this packaging of the potential cataclysmic problems that enables promotability.
Consider the case of McDon-ald’s®. When they did their consumer calculus, they concluded that they would be more likely to gain marketing momentum by packaging a Big Mac® rather than wishfully thinking that they could cause millions of consumers to remember to ask for “two all-beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun.” In McDonald’s desire to further encourage the population to become fast-food patronizing, gastronomic incinerators of their burgers, they know they must rely upon the branding of their burgers. Not that burgers necessarily represent a threat, although some would argue differently (“Super Size Me”).
Proper branding of any concept therefore, is vital to its promotability and ultimate acceptance. Accord-ingly, the real estate industry might be prudent to collectively package and label the multitude of threats it faces in order to effectively address them. Therefore, I respectfully suggest that we consider branding the combined threats to our industry (for internal purposes alone) as, ”Real Estate Industry Warming.”
The “two all-beef patty” descriptive-type alternative that we are presently using within the industry to characterize and call attention to our concerns is very fragmented and therefore, non-galvanizing. An effective response to a multi-dimensional major threat, as illustrated above, requires that the threat be well defined and properly packaged in the broadest of terms, otherwise the response risks becoming a series of individual and incremental solutions that lack the focus, gravity and necessary response congruous with the threat.
And so there is no doubt, the following amalgamation of threats is one I am sure you are all familiar with.
Real Estate Industry Warming might serve as our modern-day rallying cry similar to, (with my apologies to the U.K.) “The British are coming!”
Perhaps, industry leaders could mount a more effective and coordinated response if we just acknowledged that what we are truly encountering, yet might be unsurprisingly reticent to admit, is “Industry Warming.” Since each real estate transaction includes a piece of our planet being sold, no industry is more connected or integral to the subject of Global Warming than real estate. Not only because of the topical and timely nature of Global Warming, but also for the sake of contrast, I will allocate part of my allotted article space to the repurposing of some scrupulously researched information on Global Warming.
According to a recent Time Magazine/ABC News/Stanford University poll, 88% of those surveyed believe Global Warming threatens future generations. Fox News (not known for pandering to Al Gore) also reported that 77% of Americans believe global warming is happening and a 60% majority think it either represents a major problem or a crisis.
This does not guarantee that all in our industry do, however, accept this highly charged issue that is causing such significant anticipatory anxiety. I believe there is a fundamental nexus that justifies my adjoining “Global and Industry Warming.” Many consumers will not only look to our industry for assurance about the value of the property they already own (ironically as many markets cool off), they will also voice concerns regarding the future climatic impact on the real estate they are considering. This demonstrates just one example of the intrinsic relationship between these two warming issues.
Those who patently reject the notion of Global Warming altogether, or at the very least think the issue is being catastrophetized, might wish instead to focus more on the issue of Industry Warming. Considering the relative severity of each threat raises this question, “Do you think Global Warming, although it is a monumentally more important subject than Industry Warming, is more or less imminent than the threat or impact of Real Estate Industry Warming?” Before you answer, let’s examine both warming trends.
Now that you’ve had a chance to view my thermostatic tandem, I’d like to dedicate the remainder of my thesis on Real Estate Industry Warming to a deeper analysis of some of its causes and potential responses. Industry Warming, in my view, can be better appreciated by considering the following:
GIVING CONSUMERS WHAT THEY WANT MOST
1. We are in the information age (although transitioning into the knowledge age) and yet our industry’s DNA would seem to suggest that there is a relentless reluctance to give out information, e.g.:
Consumer who calls: “Does the home have four bedrooms?”
Agent trained not to answer, but instead repeat questions: “Do you want four bedrooms?”
A poll was recently taken where consumers were asked what their favorite method was for irritating someone and the winning ploy was “repeat the question.” The level of irritation that is caused by denying the consumer information is heating the consumer.
SERVICE VERSUS SKILLS
2. Perhaps no venerated industry concept is more responsible for Industry Warming challenges than how we defend an assault on our industry’s value by offering as a solution, “we give the best service.”
In an era when many consumers see a real estate transaction as a fee-inflated event, which they have to subsidize in order to promulgate an inefficiently run industry, our industry continues to charge surgeon-like fees and explain them by saying, “We give the best service.”
Do we really believe that increasingly sophisticated consumers actually prefer to trust their real estate needs and substantial monies to someone who is, “nice and nurturing” or rather to someone who is knowledgeable, skillful and effective? While these two sets of characteristics are not mutually exclusive and should work in concert, the question becomes, “Which trait better translates into perceived value?” Thus, “Which should take precedence and be industry emphasized?”
As an example, while everyone would want their surgeon to possess a good bedside manner, perhaps of even greater significance and value would be his/her surgical skills. However, even when we focus on the benefit of proclaiming that “we give great service,” one has to wonder its impact, because unsurprisingly, no company to my knowledge seems to be announcing, “we give bad service.” To most of the free world, service represents the frosting on the cake or value added. Industry Warming is occurring because the real estate industry is desperately holding on to the notion of good service as its core competency. Doctors, attorneys and CPAs justify fees based upon professional skills, while their assistants and lower-paid colleagues are noted for their excellent service.
Recently, USA Today conducted a poll asking readers to indicate who gives the best service. I am thankful (against the wishes of many in our industry) that the real estate industry did not receive enough votes to be included (neither did the medical, legal, engineering or finance industries). Industries that ranked the highest were restaurants (waiters and busboys), department and specialty stores (sales clerks), and grocery stores (checkers and baggers). It would appear that the consumer intuitively does not equate service with highly paid, high-level professionals. Perhaps we can learn from what consumers value most.
Please understand that I have enormous respect for all the aforementioned professionals and everyone else who works in the service sector. It’s just that I could never reconcile paying an extra $10,000 after a meal for receiving outstanding service.
For us to stop the Industry Warm-ing that is eroding our value, we must do a significantly better job of both stressing, and then more accurately portraying, our real value. The industry’s skills, and thus greater value and skills, already exist in abundance, but the value is being poorly communicated. I must emphatically assert that highly-skilled Realtors deserve every penny and more of the fees they charge. It is just that consumers must equate such value with the negotiating, marketing, merchandising (staging), networking and other well-honed professional real estate skills as opposed to the vagueness and non-specificity of service.
Our industry inadvertently, yet nevertheless damagingly, is misrepresenting, under-serving, and not properly promoting the real value of real estate professionals that already exists. Instead of celebrating and communicating the great skills of real estate professionals, unwittingly, this value is being stymied or stultified due to our romantic attachment to concepts like, “We Give the Best Service” and “We Have to be High-Tech and High-Touch.” Industry Warming will continue to present significant problems to our industry if we remain dedicated to the notion that fees from $10,000 to tens of thousands of dollars will continue to be justified through the ethereal notion of, “We Give the Best Service.”
It should come as no surprise that when careers are listed by sector, real estate agents are usually listed in the “service sector” and not the “skills sector.” Our willingness to be placed and kept in the service sector (even by ourselves) might explain our unpreparedness to better respond to the sincere concerns being expressed by consumers regarding real estate industry value. Our industry cannot settle for simplistic solutions such as merely stating intently that we are both high-tech and high-touch. Unfortunately, high-touch is a very difficult notion to be appreciated and lacks gravitas. Instead of focusing on high-touch and continuing to expect people to pay tens of thousands of dollars and more in fees for the sale of their property, because we offer high touch, we need to get more in-touch with what represents true value—that being professional real estate skills and knowledge applied against a real estate consumer need or challenge.
While it is irresistibly convenient to just chalk-up every challenge to how we have to give better service and be high-touch, these simplistic and myopic responses are not going to slow down Industry Warming. Industry Warming or a potential “meltdown” of fees (and fees are all negotiable and different throughout the industry) can all be addressed through skills. Service should be a given, and anyone in our industry not willing to give great service is in the wrong career. Let’s stop being so excessively self congratulatory over what should be a fundamental given…service. Again, service is the frosting on the cake, not the cake.
OFFLINE TO ONLINE MARKETING
3.For 10 years, nary a broker across the country has not announced to their entire company that consumers are going online, (77% of all home buyers search for a home online) and yet are still wasting most of their money (approximately 90%) offline. Does this profoundly troubling disconnect exacerbate Industry Warming? (of course it does). Potential remedy: Shift from a listing-obsessive culture (because consumers can list their own properties on the Internet, DUH!) to an integrated marketing culture for our industry. Our Gregorian chant-like industry precepts such as “listings are the name of the game,” “if you don’t list you don’t last” or “who is the listing agent?” make us vulnerable to the ease in which consumers can self-post their own listings, which will exacerbate Industry Warming.
This poorly perceived and ill-positioned premise of our core value will lead to further warming by suggesting to ourselves, but more disturbingly, to the consumer, that the mere “listing” of a property is actually a highly celebrated achievement on the part of our industry. Regrettably for us, this non-remarkable activity is one that consumers can also perform. Rather than gravitating to the lowest value possible, we need instead to utilize a holistic, integrated offline and online customized marketing system approach. Otherwise, we will continue to further heat and self-torture ourselves and our real and perceived values. One solution is REALTOR.com® and the newly introduced Company Showcase Program whereby companies can enhance all of their listings and make it a part of their overall offline and online branded marketing system.
ATTRACTING MARKETING VERSUS
PERSONAL PROMOTION-ORIENTED AGENTS
4.Companies must do more to attract those professionals to our industry who have dedicated their antecedent experiences to becoming a part of the skill sector and not the service sector. Prospective skillful agents will use the Internet and skillful agents will also better employ the Internet and your marketing resources. Attracting or educating professionals based upon the value of their professional skills will in turn also alleviate the pressure that personal promotion-oriented agents place on you to waste company money in the newspapers.
LET’S LEAVE RETENTION TO THE PRISONS
5. In order to attract skills-based prospective associates, our industry might want to taper off on announcing in local newspapers that their professional real estate agents just completed “Quick Start.” Please consider this question: “Would learning that a doctor, attorney or pilot just completed a Quick Start program elevate your comfort level or their value?” Quick Start is synonymous with the service sector, because you can train a clerk in a few weeks, but not a professionally skilled real estate agent.
“Quick Start” and synonymously branded industry-based accelerated learning programs are both honorably and vitally important, and a sacred responsibility for all companies. My concern is that a “Quick Start” matriculation may actually be viewed by consumers as non-remarkable, less impressive and even counterproductively, and therefore, a disclosure that we might consider disdaining. The consumer is left with a not-so-difficult choice that the company is helping to make very clear. You can either select one of your real estate friends who is promoting in the newspaper how they sold $20 million of real estate last year or instead be seduced upon learning in the same newspaper that another one of your friends, or a stranger for that matter, has more than likely never had any transactions, but has completed “Quick Start” (A reference similar to, “But I did stay at a Holiday Inn Express last night.”). It is not surprising why top producers are not troubled by this limited positioning of their new competitors.
Congruous with the Industry Warming threat of not attracting more skill-predisposed professionals, might be the need to purge industry favored expressions like “recruiting” and “retention.” Arguably, the only competition we will continue to encounter for the overuse and dilution of these words would be the military (recruiting) and the prisons (retention). Perhaps Industry Warm-ing would be cooled off a little bit by the substitution of the words and concepts, “selection” rather than “re-cruiting,” and “development” rather than “retention.”
One example of cooling down industry warming might be that we select skillfully inclined professionals and then develop them in a way that they become certified in skill areas like negotiating, marketing, merchandising and networking. Skillful real estate agents in turn will immediately recognize the absurdity of marketing and advertising dollars being directed into ghost town-like newspaper real estate sections. Moreover, these high-caliber professionals will stop pressuring brokers to waste company money through the continuation of irrelevant advertising. Skilled professionals will instead present customized marketing systems (including REALTOR.com) and solutions from company and industry-indigenous sources and be able to expertly contrast the difference between how a highly skilled marketer represents a home seller versus someone who is unskilled at marketing.
CLEANING UP THE
CLEANSING IDEA
6.Fifty percent of consumer-generated real estate e-mails, according to some surveys, are ignored. If these consumers are not willing to consummate a transaction in the near future, they either become abandoned or become part of the process some in the industry actually refer to as a scrubbing, cleansing and incubating. These are words that are embraced by technological companies engaged in data processes that do not have to rely upon high-level communication and personal and proper etiquette when serving consumers. Those parties I coined as “Cyberspace Carpetbaggers,” love it when real estate professionals are willing to concede the enormous human-relations positional advantage that they have developed with millions of consumers over many decades and adopt high-tech verbiage that treats consumers like “widgets.”
Referring to the treatment of consumers who do not satisfy our industry’s instant-gratification needs by not wanting to buy or sell a home in the near future, with such demeaning words as “cleansing,” will become increasingly problematic. The word “cleansing” has become quite infamous and in fact terrifying through how it has been used in a devastating inhuman context by very evil people. One has to wonder, in an age of Industry Warming, are we wise to continue to make such communication part of our industry’s culture?
THE CENTER OF THE TRANSACTION
7. Many well-meaning industry loyalists passionately proclaim that Realtors must remain at the center of the transaction. Not as evident is the prescribed strategy. That aside, I believe, “Cyber-space Carpetbaggers,” as I have repeatedly stated, love what appears to be our myopic commoditization of the real estate process into a mere transaction. They fervently hope that the real estate industry will be satisfied to engage consumers only when they are ready to buy or sell. This is part of their strategy to control first point-of-contact with the consumer by engaging millions of consumers during the intermittent stage, so that they can then control their real estate transactional destiny. The reason why Move.com was established was so that consumers, who are just focus-ed on the periphery of a real estate transition, would visit a site whereby all resale marketing and sales needs would be driven to REALTOR.com and then onto Realtors. One of the ways that Realtors can also strengthen their overall value is by evolving from a position that attributes over pricing as the virtual singular explanation for why homes don’t sell and to embrace a more holisticly accurate and consumer friendly explanation—that being that homes don’t sell because of ineffective marketing, because price is part of marketing, but marketing is not part of price. Since our industry is charging significant fees for the marketing of homes versus the mere pricing, it might behoove us to first internalize and then externalize a greater reason for the success or failure of a property’s selling success, rather than merely an estimate of value, especially, given the preponderance of sites that will enable home sellers to navigate on their own an estimate of their home’s value. In a nutshell, if the only reason a home doesn’t sell is due to price, than why wouldn’t a consumer think that the only reason a home does sell is because of price and therefore why such fees? Or in other words, does this oversimplification of the more comprehensive and valuable role of a Realtor exacerbate Industry Warming?
BEYOND THE INTERNET
8.Eleven years ago, I created and introduced a concept called “The Real Estate OuterNet.” At that time, as president and co-owner of a 32-office real estate brokerage, I felt that it would be injurious to have our company’s value inferred disproportionately by the real estate value of the Internet, as those who I referred to as “Cyberspace Carpetbaggers” seeking to impose real estate tariffs would wish. I am reintroducing in this article for illustrative purposes, “The Real Estate OuterNet.” My current motivation comes from the following sources.
#1. The REALTOR.com Company Show-case Marketing System, where a company can have every property for sale enhanced on the world’s No. 1 real estate Web site and then decide how the consumers are going to be skillfully responded to and served, should be just a mere part of your company’s overall branded marketing system, i.e., a part of your OuterNet.
#2. We cannot allow the concept of home valuation to be oversimplified as part of our industry’s value by causing consumers to merely focus on what a home is worth versus how to also make a home worth more. Not only does one need a Realtor to go beyond any zestimate™, but a Realtor can use their experiential and skillful knowledge in connection to how staging, marketing, networking and negotiating can increase the value of a home. Moreover, when Internet-based companies suggest that a consumer can realize what their home is worth due to the Internet alone, it promulgates an even more insidious notion. That is, if the commoditization of a real estate asset is such that Internet-based information can provide the consumer with what their home is worth in advance of professional-applied Realtor skills like marketing, negotiating, etc., then why should one pay a fee for irrelevant skills and services? If that is the case, their home, like a stock, already has a value that can be predetermined. This is an immensely dangerous precedent that the industry is allowing to be established, because a consumer owns a stock and is told its value does not subsequently pay tens of thousands of dollars for the stock to be marketed and sold.
Where real estate is different (thankfully for industry fees and its entire value proposition), is that a consumer only realizes what their home is worth after a process of a real estate professional employing high-level skills, which then become the justification for this well-deserved fee. Suggesting that consumers can find out what their home is worth in advance of using a Realtor's skills leads to an e-trade like consumer mentality, which is fine for stocks, but not for real estate. Realtor skills can significantly increase value and therefore the fees are deserved. This also means that industry forces must evolve from a hyper-obsessiveness promoting how we sell more homes to one that promotes how we sell homes for more. This is why I have decided to include “How to Make Your Home Worth More” on REALTOR.com, because this celebrates Realtors’ skills and value.
#3. The last reason for my introducing “The Real Estate OuterNet” is that for those who think there is Industry Warming and that Industry Warming is being caused by new entrants seeking to fuel the flames of attack on the industry value chain, then I respectfully suggest that you challenge your entire organization to respond to the following thoughts:
A. How should we systematically integrate our offline and online marketing into a company-wide promotable value to the consumer? This exercise is important because home sellers are not going to be asking, “how will you be Web siting my home” or “what is your Web site fee?” The majority of real estate companies do not have a branded marketing system offline and online that has been integrated because they are still focused on their IT department’s generated and managed Web sites.
B. How can all of our company’s non-Internet related value be better packaged or integrated or communicated? When a company does not better package their inherent value, the results are as follows:
A company with 500 agents expects all 500 of their agents to ask for the same marketing fee, while their agents are offering 500 different explanations along with materially different levels of marketing skills to consumers. Therefore, even though each agent brings a different degree of value, consumers are expected to infer that the value is always the same. This cries out for an integrated promotable offline and online marketing system which we at REALTOR.com not only want to be a part of, but can help you develop.
My major suggestion on how to take the business back (not from the agents but from the interlopers) from the industry-assaulting classified ad extortionist newspapers, is to recognize that nobody is going to outperform the Internet’s ability, appetite and destiny to display listing data in a ubiquitous way. Simply put, as an industry we have to decide which war are we more capable of winning: the Internet Information War or the Real Estate Marketing War? The industry must make a distinction from the mere posting of data to the skillful marketing of homes by an industry that can cool warming because of our integrated offline and online skills-based and branded marketing systems. For this war against Industry Warming to be won, we desperately need packaged systems and brand names which are positive, value packed and clearly communicated just like “Global Warming” and “Industry Warming.” |
